The Hong Kong virtual bank is planning to increase its footprint in the Web3 sector by providing local stablecoin problems with safe fiat reserve solutions.
The announcement that ZA Bank of Hong Kong would provide stablecoin issuers with specialized banking services is likely to hasten the adoption of Web3 in the region.
The virtual bank located in Hong Kong is reportedly allowing issuers to use fiat reserves as collateral for digital assets, as announced on April 5.
Banking services, including money transfers, payroll administration, and a variety of deposit choices, will also be available to stablecoin issuers.
“Unwavering support” for the Web3 community is something that ZA Bank’s alternative chief executive, Devon Sin, has stated:
“By introducing these new services, we are tackling the specific problems that stablecoin issuers have, which will help the Web3 economy progress and remain stable.”
In order for stablecoins to keep their value, the issuer usually has to have a certain amount of fiat money, such as dollars, in reserves. This makes sure that stablecoin holders can always get their hands on the same quantity of the fiat money that underpins them.
But stablecoin issuers have had a hard time securely maintaining these reserves, which has slowed acceptance and created a huge demand in the larger Web3 ecosystem.
ZA Bank has been making an effort to be part of the growing Web3 community in Hong Kong. Its 2023 client transfer volume in the Web3 sector was above $1 billion.
The announcement was made in May 2023, only one day after the Hong Kong Securities and Futures Commission (SFC) announced that it would begin accepting applications for licences to operate retail virtual asset trading platforms (VATPs). The administrative area will then begin to provide virtual asset trading to the general public.
Since then, the bank has reportedly met over 80% of the VATP’s Hong Kong customer banking requirements.
As part of its drive for local acceptance, it claimed to have onboarded over a hundred Web3 enterprises. According to a consultation document from the Financial Services Department, the Treasury Bureau, and the Hong Kong Monetary Authority, the Hong Kong government declared in December 2023 that stablecoin issuers will be required to get licenses.
In order to meet the requirements for this kind of license, all stablecoins in circulation must have reserves “at least equivalent to the par value.”
Also Read: Ethereum-Based Ethena Labs to Launch USDe Stablecoin
